Strategic Planning for Medical Practices

April 3, 2017

Strategic planning should be an essential element of the ongoing management and operations of a medical practice. How the strategic planning process is implemented, and how the plan itself is ultimately executed will determine the ultimate value your medical practice places on the planning itself.

In the past five years, strategic planning processes and related strategic initiatives have over weighted external market factors and under weighted internal needs and related initiatives. A balanced process that properly evaluates internal and external environmental issues and develops strategic initiatives with respect to those issues can create more success opportunities for your medical practice. The strategic planning process can be broken into the following phases:

  • Physician interviews and questionnaires
  • Mission Statement development and ratification
  • Internal environmental assessment
  • External environmental assessment
  • Action plan – Goal setting
  • Follow-up and measurement of action plan
  • Annual edit and revisions to initial strategic plan
  • Action plan – Goal setting – Year Two
  • Follow-up and measurement of results

Physician Questionnaires and Interviews

The most efficient approach to the planning process is an initial step that involves the combination of physicians completing a fairly detailed questionnaire and some selective physician interviews. The process begins with a very lengthy questionnaire that management reviews and pairs down to focus on the questions that are most relevant for the particular group engaging in the planning process. The questions include both written responses and responses on a scale of 1 to 10. I therefore arrive at qualitative and quantitative responses. The responses are summarized into successes, lessons learned from successes, failures, lessons learned from failures, strengths, weaknesses, opportunities, threats, and other issues. While the tendency in health care is to always look at what is wrong (i.e. the negative), there should be an attempt to initiate the planning process by looking at what is right with the practice. This is done in order to create some reinforcement that the practice has had successes and done many things right in its history. This establishes a positive framework for the planning process and any planning retreat that is held as a part of the planning process.

The use of a physician planning questionnaire has been much more successful and beneficial than actual physician interviews. The questionnaires keep the physicians focused while interviews tend to get off on tangent conversations that consume time, but are not necessarily beneficial to the planning process. It is communicated up front to the physicians that the questionnaires shall be completed and compiled in a confidential manner, so that no physician will be identified with any comments. This again has been very successful in getting straight forward responses from the physicians. It is appropriate to interview key executive physicians early on and midway through the process. You want to make sure where the group wants to go with the planning and that you are staying on track.

Mission Statement

A Mission or Vision Statement is essential for any business, including a medical practice. The group needs to commit to writing its mission, its vision, its philosophy, and its strategy. This will help provide direction to the group. A group that has a Mission Statement should annually review and ratify or modify this statement as appropriate.

For a medical group that does not have a Mission Statement, the planning retreat is usually not the best place to develop a Mission Statement. The preferred approach is to have a number of key people within the group develop a “draft” of a Mission Statement, and use the planning process and planning retreat to modify and ratify the mission. This will provide the best use of a physician’s time as it relates to the Mission Statement.

Internal Environmental Assessment

If there is any area of the medical practice that has been shorted with respect to attention within the last five years, it has been the internal infrastructure of the practice. With the alphabet soup of transactions in the last five years (GPWW, PHO, MSO, IPA, merger, etc.) there has been little attention paid to the infrastructure needed to execute most of these strategies as well as to execute the day-to-day needs of the practice. It is now evident that due to the lack of attention, practices are having operational problems. The internal environmental assessment is a joint effort between management and their consultants in documenting their needs with respect to staff and all related issues (training, quality, staff levels, stability, cost, etc.). Other internal issues to be evaluated include management information systems, telecommunication systems, physical plant and facility, locations, ancillary services, and internal marketing issues. This assessment is completed in a detailed written format. After studying the assessment, the objective is to arrive at strategic initiatives or action plans that need to be undertaken to address the issues and concerns from an internal practice perspective.

External Environmental Assessment

This assessment involves the written documentation of the external marketplace and all of its implications on the medical group. This includes an evaluation of competitor physicians/practices, an evaluation of hospital systems, an evaluation of payers and changes taking place within the payer environment, an analysis of the demographics of the practice and the demographics of the marketplace served by the practice, physician service needs identified by the community, any recent significant events in the marketplace with respect to other medical practices, hospital or payers, projected future changes in what the market may need and/or demographic or socioeconomic changes in the marketplace, and an assessment as to future regulatory changes. The focus here is written documentation with respect to each of the items identified which assist in the construction of strategic initiatives as it relates to external market forces.

Action Plan – Goal Setting

Development of an action plan and goal setting can occur through either the strategic planning retreat format, or through a strategic planning subcommittee that develops the action items and goals for the rest of the organization to react to. In smaller group practices, the planning retreat format is effective because it allows all of the physicians to feel they had input. The physician questionnaires, internal environmental assessment, and external environmental assessment lay the groundwork so the retreat can be focused and therefore efficient. These retreats should be a minimum of four hours and a maximum of six hours for optimum results. A single-day format is most effective due to the time pressures on physicians. The four to six hour window forces all participants to get work done. The two-day retreat format generally results in the same subject matter being stretched over the time allotted and does not necessarily produce more or better results.

The approach to the planning retreat process is an initial educational session, which is the consultant’s view of the healthcare world, and specifically the market where the medical group practices. The next part of the retreat focuses on the key areas identified through the internal environmental assessment, the external environmental assessment, and the physician questionnaires. All of this information is placed on flip-chart sheets prior to the retreat so that no time is taken up during the retreat in writing this information. At the end of the session reviewing all issues, time is taken to see if any additional items have come to the minds of the participants between the initial completion of the questionnaires and the actual planning retreat. The issues identified are then prioritized through a voting process that does not involve debate but involves a numeric voting process. Once the items are prioritized, action plans are developed. The retreat concludes with a summary of the action items agreed to.

If a strategic planning subcommittee is utilized, then a nearly identical process to the planning retreat process is followed. The results of the sub committee planning are presented to the group as a whole for discussions and approval.

Follow-Up and Measurement of Results

The action plan includes the designation of the responsible party, resources needed, date due, date completed, and results achieved. The follow-up and measurement process is a quarterly review of the action items with written documentation as to the status and results achieved from the execution of the action plan. Many planning processes fail and therefore create a low sense of value to medical practices (at least as perceived by the practice) when there is no follow-up and measurement of results from the action items agreed upon. The lack of follow-up and measurement is what typically creates a perception in the medical practice’s mind that it really does not engage in strategic planning.

Year Two and Beyond

Once the initial planning process has been completed with good written documentation on the internal and external environmental assessment and the action items, the plan becomes easily updated on an annual basis. This creates a more economically efficient process, a more time efficient process, and what now becomes an ongoing business plan that is actively managed by the practice rather than a one-time strategic planning retreat or process.

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